Shares of Dilip Buildcon, an infrastructure company, gained strongly in Tuesday's trade after the company received an order worth over ₹780 crore.
The company announced in a filing to the stock exchanges on Monday that it has been declared the L-1 bidder for a new HAM project – 'Bengaluru -Vijayawada under Bharatmala Pariyojana Phase-I' – in Andhra Pradesh for an estimated cost of ₹780.12 crore.
Following the development, the company's shares opened strongly at ₹178.80 apiece, compared to the previous closing price of ₹175.80, and grew further to hit an intraday high of ₹193.40, up by 10%.
During Tuesday's trade, the stock recorded a volume of 5.5 million shares, both on the NSE and BSE.
On March 02, the company said it has executed a contract agreement with Gujarat Metro Rail Corporation (GMRC) Ltd. for phase 2 of the Ahmedabad Metro Rail Project. The value of the contract order amounts to ₹723.45 crore.
In the last one-year period, the stock has underperformed the market, falling from the ₹236.70 level to the current trading price of ₹187.70, resulting in a fall of 20.70%.
Despite this weak performance, brokerage firm HDFC Securities has kept its optimistic view on the stock. This is due to the company's strong order book and decent performance in the December quarter.
The Q3FY23 performance of Dilip Buildcon in terms of execution, order inflow, and balance sheet is largely in line with HDFC Securities' annual estimates.
As of December 2022, the company's order book stood at ₹265.4 billion. In the current fiscal year, up to this point, DBL has secured ₹100 billion of orders and anticipates ending the year with a maximum of ₹120 billion in total order inflow, said the brokerage.
For the first nine months of FY23, the road, water supply, and metro sectors, respectively, accounted for 42%, 33%, and 25% of the orders.
The order book is composed of several segments, with roads, mining, irrigation, metro, special bridge, tunnel, and water supply making up 39.5%, 17.4%, 14.3%, 5.8%, 3.1%, 7.7%, and 12.2% of the total order book, respectively.
The company's standalone net debt was at ₹25.9 billion as of December 2022, compared to ₹27.1 billion in September 2022, with a net D/E of 0.58x, as against 0.61x in September 2022. The company expects its net debt to reach ₹24 billion by March 2023, according to the brokerage.
The company incurred a capex of ₹150 million in Q4 FY23. For the entire FY23, the company expects to spend ₹700 million, while in FY24, it expects to spend ₹500 million. The bulk of these expenses will be allocated towards acquiring special instruments needed for the Metro project and water supply project, it added.
HDFC Securities has maintained its "buy" rating on the stock and raised its target price to ₹355 apiece. This represents a significant upside of 89% from the stock's current trading price.
05 analysts polled by MintGenie on average have a 'hold' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.